Precision and efficiency are paramount in the intricate world of materials management, purchasing, and strategic sourcing, and SAP Stock Transfer Order emerges as a linchpin in achieving seamless stock movements across diverse business locations.
From optimizing stock levels to fostering real-time visibility and ensuring compliance, the SAP Stock Transfer Order module stands at the forefront of enhancing business processes and improving connections between the receiving point and shipping point.
This article discusses the core components and capabilities of SAP Stock Transfer Order, how it empowers organizations to facilitate accurate and effective stock transfers, and where our expert SAP consultant team can come in to help.
What is Stock Transfer Order (STO)?
A stock transfer refers to transferring warehouse items from one plant, storage location, or other area of the distribution channel to another, enabling companies to optimize storage capacity and accelerate their product handling processes.
The typical stock transfer process involves the following steps:
- Create a plan for the transfer between storage locations.
- Generate a stock transfer request for the items to be transferred.
- Transfer the items from the supplying plant to the receiving plant.
- Confirm the receipt of the items at the destination storage location.
- Place the items in the appropriate storage location in the receiving plant.
Types of Stock Transfers in Inventory Management
Stock transfers can be classified by location or method, yielding four main transfer types:
1) Inter-company transfer
Inter-company stock transfers move inventory between two separate organizations, often involving multiple departments within each company, including sales, procurement, logistics, and more.
When conducting an inter-company transfer, companies must carefully navigate stock documentation using different company codes for each company.
2) Intra-company transfer
An intra-company transfer involves the stock exchange between two separate locations within the same sales organization. This typically refers to the transfer of materials from one plant to another within the same company using the same company code.
3) One-step procedure
In the one-step process, the stock transfer issue and receipt are created in the same step, enabling users to issue the goods to their intended destination through a single STO.
This procedure is typically best suited for intra-company transfers in which the supplying plant and receiving plant are close to each other, as the total value of the inventory stays the same even as quantities at each sales org location change.
4) Two-step procedure
The two-step process enables both organizations involved in the stock transfer to track efficiency by requiring each end of the distribution chain to issue the STO document.
The sending warehouse marks an item as ‘in transit’ and sends it to the receiving plant. Once the item reaches its final destination, the receiving warehouse marks the transfer as complete.
By involving each side of the transfer and enabling both organizations to update their quantity and valuation price as needed, it’s easier to track transfer efficiency and improve the inventory management process.
Overview of Stock Transfer Order in SAP
STO in SAP refers to the intra-company process of transferring materials between multiple plants in the same company with the same company code.
With the movement of materials or items between two plants, the STO process involves physically transferring each good across plants belonging to the same organization via delivery without billing.
By leveraging STO in SAP, organizations can:
- Plan a goods receipt in the receiving plant and monitor stock in transit during the transfer
- Leverage a replenishment delivery document created via Inventory Management or Shipping in SAP SD to enter the goods issue (GI)
- Convert the STO requirement part of MRP and Purchase Requisition to the STO
- Activate an availability check for critical stock transfer movements
- Enter a Freight/Forwarding vendor and delivery costs directly into the STO
Understanding the SAP Stock Transfer Order Process
Here’s a closer look at each STO process within the SAP system:
Stock Transfer Between Plants (1 Step)
The one-step stock transfer process can only be completed in SAP Inventory Management and neither the Sales or Purchasing modules in the respective issuing and receiving plants are involved.
By utilizing the one-step procedure, users will follow these steps:
1) Enter stock transfer as a transfer posting in SAP Inventory Management.
2) Schedule the transfer posting by creating a reservation.
3) Post the quantity of stock transferred from the unrestricted-use stock in the issuing plant to the unrestricted-use stock in the receiving plant.
4) Valuate the transfer posting at the valuation price of the material in the sending plant.
5) If the transfer occurs between plants that belong to different company codes, create two separate accounting documents for the STO and offset the stock posting against a company code clearing account.
Stock Transfer Between Plants (2 Steps)
The two-step process is similar to the one-step process in that it can only be carried out in Inventory Management and does not involve Sales or Purchasing.
Two-step stock transfer involves the following characteristics:
1) The stock transfer posting cannot be scheduled through a reservation.
2) The transfer posting is evaluated at the valuation price of the material in the sending plant.
3) The quantity required and posted from stock is first managed as stock in the receiving plant and posted to the unrestricted use of the receiving plant in the goods receipt posting.
4) If the sending and receiving plants use different company codes, two accounting documents are created and a transfer is made between both plants and company codes.
5) The transfer involves both a goods issue in the issuing plant and a goods receipt in the receiving plant.
Stock Transfer Order without Delivery Document
A STO without delivery in the SAP ERP system involves the following steps:
1) Generate a stock transport order by converting a stock transport requisition within SAP ERP.
2) Post the goods issued for delivery to the sending plant and manage the booked-out quantity within the stock in transit of the receiving plant. (Optional: Collect and transform stock in-transfer when conducting internal stock transfers.)
3) Post the goods receipt to the receiving plant, reducing stock in transit.
Stock Transfer Order with Delivery Document
While this process follows the same steps as the stock transfer without delivery, there are a few additions to consider when adding delivery:
1) Create a delivery within the SAP ERP system.
2) Generate a shipping notification in the sending plant and send it to the receiving plant if exact information about IBP receipts is needed for business purposes.
3) Ensure the inbound shipping notification is set as relevant for Materials Requirements Planning (MRP) in the receiving plant, collect and transform the notification, and reduce the stock transport order.
4) Monitor the automatic transformation and collection of changes if working directly with a shipping notification in SAP ERP.
Stock Transfer Order with Delivery and Billing Document
This transfer involves the movement of goods between plants that have different company codes. It can be conducted as a one-step or two-step procedure and is not posted at the valuation price of the material in the sending plant but instead defines the price in both the issuing and receiving plants.
Stock transport order with delivery and billing documents involves the following SAP applications:
Shipping (LE-SHP): Facilitate the delivery from the issuing plant to the receiving plant.
Purchasing (MM-PUR): Enter the purchase order.
Inventory Management (MM-IM): Generate goods receipt in the receiving plant.
Billing (SD-BIL): Create the billing document for the delivery of the goods to the receiving plant.
Invoice Verification (MM-IV): Verify invoice receipt in the receiving plant.
Main Advantages of Stock Transport Orders for SAP Users
SAP STO functionality empowers business users to optimize inventory, streamline supply chain processes, gain real-time visibility, and ensure compliance and accuracy in stock transfers.
Here are a few critical advantages of the STO solution for SAP users:
Inventory Optimization
SAP STO allows companies to optimize inventory levels by facilitating seamless stock transfer between locations or warehouses. This aids in maintaining adequate stock levels, reducing excess inventory, and minimizing overall carrying costs.
Supply Chain Efficiency
Business users benefit from enhanced supply chain management as SAP STO enables smooth coordination between business units, locations, and subsidiaries. This efficiency ensures the right products are available in the right locations at the right time, minimizing disruptions and delays across the entire distribution chain.
Real-time Visibility
The SAP STO system provides real-time visibility into stock movements, enabling business users to track the progress of critical STOs. This transparency improves decision-making, as users can quickly assess stock availability and respond to changing demands or unpredicted issues.
Cost Savings
SAP STO contributes to cost savings by optimizing stock levels, reducing the need for emergency shipments, and minimizing stockouts or overstock situations. By leveraging a strategic approach to inventory management, organizations can operate more cost-effectively and improve the total cost of ownership.
Compliance and Accuracy
SAP STO supports accurate and compliant stock transfers by providing a structured process for documenting and executing stock movements. This ensures that businesses adhere to regulatory requirements and maintain precise records of stock movements, fostering transparency and auditability.
How Can We Help?
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Getting Started with Our Team
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So, whether you need help outlining a plan to implement new modules into your existing SAP landscape or an extra hand maintaining your material master record through migration, we’ve got you covered.
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